Improper assessment led to fiscal imbalances in UP: CAG

The Comptroller and Auditor General of India (CAG) has said that various fiscal parameters including revenue deficit show "improper" assessment of the fund requirement and fiscal imbalances by the UP government.
The CAG report said three fiscal parameters - revenue, fiscal and primary deficits - indicate the extent of overall fiscal imbalances during a specified period.
It said persistent savings in substantial number of grants over the year was indicative of improper assessment of the requirement of fund by the state government repeatedly without proper scrutiny of the need and flow of expenditure.
The CAG report on the state's finances for the year ended March 31, 2014, stated that the revenue expenditure increased by Rs 17,423 crore which was 12 per cent over 2012-13.

The report tabled in the state Assembly said expenditure was lower than the revised estimate.
It said non-plan expenditure increased by Rs 11,644 crore plan expenditure by Rs 5,799 crore as compared to previous fiscal.

"Non-plan revenue expenditure was far ahead of normative assessment made by the 13th Finance Commission," it said.
The report said that capital expenditure also increased by Rs 9,029 crore which was 38 per cent higher than the previous year.
"It also exceeded the revised estimate. The recovery of loans and advances increased by Rs 171 crore, but was lower than the revised estimate of Rs 834 crore," it said.

The CAG report further noted that cash balance of the government decreased by 73 per cent.
"The performance of the state revealed that it had revenue surplus and contained fiscal deficit achieved targets set under Fiscal Responsibility and Budget Management Rules.
However, total outstanding debts to Gross State Domestic Product at the end of 2013-14 was above the target set in revised estimates and projection made in five-year fiscal plan," it said.
The report said expenditure amounting to Rs 13,805.85 crore exceeded the provision by Rs 3,502.07 crore.
"It was noticed that the government has regularized the excess expenditure pertaining to period between 2004-2005, However, the excess expenditure amounting to Rs 17,743.99 crore pertaining to the period 2005-2013 was yet to be regularized," it said.

The report said government should ensure that the excess expenditure was regularised under Article 205 of the Constitution.
The UP government did not create Guarantee Redemption Fund resulting in contingent arising out of maximum guarantee was Rs 69,725 crore, the report added.
It further noted that against norms, the government kept the fund of State Disaster Response Fund of Rs 136.57 crore, with the maturity value of Rs 154.48 crore, in various bank accounts as fixed deposit.
The state government should have transferred the funds of Calamity Relief Fund into the SDRF as per the central government guidelines, the CAG said.